Global automakers look for dream market in rural India

Date posted: Tuesday 4 February 2014

For global automakers, the dusty back roads of rural India could be the new El Dorado. As economic torpor suffocates demand for new cars in India’s megacities, incomes are growing faster in small towns and country areas. That’s pushing the likes of General Motors and Honda Motor Co to fan out in search of buyers in places where fewer than 20 people in every thousand own a car – for now. Standing firmly in the way are strong home-grown brands. With local services plentiful and repairs cheap, Maruti Suzuki India Ltd, Mahindra and Mahindra Ltd, and Tata Motors Ltd dominate the rural vehicle market where foreign automakers are seen as expensive and distant. Car makers see success in rural areas as vital, as slow economic growth, high interest rates and rising fuel prices mean overall sales are headed for their second straight year of decline. Though the need for rural sales has been recognized, success could yet prove illusory.

(Reuters)

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